Advice to College Graduates

It is easier to get used to living with more than it is to get used to living on less.

Let us assume for the sake of argument, that while you were living in college, you were able to meet your living expenses on $24,000 or less per year. For this amount of money, you probably were able to live together with some other people, pay for food and utilities, clothes as they arose and be able to do a little bit of travel to visit the family. Let us also assume that you are lucky enough to be offered a job and have a salary of $50,000 to start.  Let us also assume that you have $3,000 in credit card debt.

You may possibly find that $50,000 that you thought was coming to you quickly turns into $40,000 due to various items withheld in your paycheck whether it is insurance or taxes.

My advice is this. Live as if you still only had $24,000 or less to live on and save the rest. If you are eligible for a match in a retirement plan at work, take it. If you have any credit card debt, this would most likely be a good time to pay it off.  If you are eligible for saving in a Roth IRA, there is a good chance that it would make sense to investigate how Roth IRAs work and consider investing the maximum contribution.  Consider placing some of the rest of the money to build up an emergency fund. Ideally this fund should be built up to 3-6 months’ worth of your expenses or in the case of living on $24,000 per year this would be $6,000-12,000.

Fast forward one year. By this time you may have: 1) paid off your credit card debt, 2) built up an emergency fund of at least $6,000, 3) saved $5,000 into a Roth IRA, 4) may have $3,000 or more dollars built into your retirement plan if your employer offers an average 3% match.

If you were to keep this savings up for four years, there is a strong chance that you will have set yourself up for a favorable financial future for a number of reasons:

1)      You will have resisted the temptation to spend what you make or more than you make. This will carry you far in life.

2)      You should have a solid cash reserve built up that not only could be useful for times of financial hardship, but could be used for a major purchase.

3)      You would have $20,000 that you would have saved into a Roth IRA, in one more years’ time (after your 5th year), you will have the opportunity to take up to $10,000 of the growth in that account and put it towards a first time home purchase.

4)      You will have time on your side when it comes to investing for your retirement, because you were diligent in investing early.

Please write regarding any questions you may have.

*Please note that everyone’s situation is different, and that you should consult a financial advisor individually before following any investment recommendations.

The Triple Threat for Women

The average woman faces a “triple threat” that the average man does not face: they live longer, they have less income earning years, and to add insult to injury, their average income is less than the average man. It is true that there are many exceptions to the rule regarding the triple threat. There are women who earn more than the average male. There are women who work earning an income for more years than the average male. Finally there are women who live less long than the average male.

But what if you are average or even close to average?

Any one of these factors could have a significant impact on one’s long term financial situation and ability to save for retirement. According to the US Census Bureau, the average woman will live more than five years longer than the average male in the United States. The average salary for a full time year round worker is $47,127 for men as compared to $36,278 for women. Women also have a greater tendency to leave the workplace to play the role of caregiver whether to children or dependent parents.

The combination of all three of these factors dramatically increases the need for planning for the future.

According to a Government Accountability Office report, 12% of women over 65 live in poverty compared to 7% of men. This number substantially increases to 21% and 15% for divorced and widowed women respectively.

Though I would encourage just about everyone to think about their finances, women especially need to be vigilant. There are simply too many factors stacked against you to not pay attention to your finances.

I have the following suggestions for women:

  1. Live well below your means.
  2. Save more than you would think that you need to save.
  3. Be involved in your finances.

Consider taking a look at your finances today. Work with someone to develop a plan on how to prepare for the “triple threat”. There is a good chance that the “future you” will thank you for your prudence.

Provocative: On Private Education

The other day I was eating lunch, and I overheard a number of people talking about private school education. I, myself, went to private school for secondary education and even went to a private liberal arts college in New England. Judging from the amount of resources that my parents spent in order to provide for this education, I am left with one extremely important question: “Was it worth it?”

I could speak anecdotally regarding my experience or on observations that I could make on former classmates as opposed to others I have known. However, I am going to speak from a value standpoint. When asked, “Why do you want to send your children to private school?” many of my clients state that they want to help insure that their children are more successful in life. When further pressed on why education is so important, most state that it is so that their children will have a better career and a better income. Many are also quick to say that we live in a tough economy. The question that I have is this, given the cost of private secondary and higher education and the opportunity costs of not investing that tuition money, would the child not be better off with a trust fund of that money to help navigate life?

It is acknowledged that there are a wide range of costs depending on the private school one attends, and that financial concerns are not the only value. I have even heard it pointed out by parents that private schooling is not so much about education as a means that those of a certain socio-economic class could mingle with those of like class. There may be a substantial value in that for some people. Nonetheless, I do strongly believe that the opportunity cost of private school education needs to be rigorously examined. Looking at the tuition costs of my alma maters (almae matres for all of you Latin fanatics), I know that I feel any progeny that I may have probably would be better off with a million dollars in a trust fund when they turn 25 or 30 than they would be duplicating my private school education experience.

What are your feelings on the value of private school education? Please write:

It All Matters

Looking at the web, there are many articles that will point out the budgetary sins of grabbing a latte at the local coffee stand or eating out for lunch rather than brown-bagging it. Now, it is true that people may spend more than they should on drinking or dining out, but there is one important observation that I do not feel is made often enough. IT ALL MATTERS.

What type of clothing do you wear?

Do you rent or own?

How large is your place?

What type of car do you drive?

What type of food do you eat?

How often do you go to events?

How much do you travel?

And most importantly, how much do you spend on each of the aforementioned?

Part of the reason that I ask each one of my clients what is important to them is simply because it all does matter. It very well could be that someone has decided they would rather enjoy their $5 coffee drink each day as their budgetary vice, but save money by being a roommate in an apartment with bills of $500 per month and saving the rest in investments. Another person could be skipping the coffee drink and bagging lunches, but they are having to worry about a $2,000 mortgage (with $1,700-$1,800 of that going to interest) and all of the associated utility bills and maintenance that come with home ownership. Unfortunately, we live in a society that loves to point out the small budgetary sins, while often turning a blind eye to the larger ones where larger savings maybe can take place.

When taking a look at your budget it is vital to ask what is really important to you and what may be just keeping up with the Jones’s. This may mean that you should cut out a few lattes a month. It may mean you should wait longer before buying a new vehicle or perhaps you should not buy as nice of a vehicle. I am not the one to say. I do not know what is important to you. I do know that at the end of the day you are the one who is ultimately responsible for your financial situation and when it comes to spending… it all matters.

Goal Setting: An Introduction – Part 4

The Final Countdown

Hopefully you have had a chance to sleep and now are ready to look over your now shortened brackets again. By this point, you should have narrowed out 75% or more of the items that you had originally listed. What you now see before you is somewhat important to you at least at this time. It probably would be a good idea to keep each of these to reference at a later time.

Now it is time to repeat the bracket process. Have all of your remaining items listed and see how they stack with each other. Once you get down to your final eight, you really should consider getting someone you trust in on the process. Talk with them over why these items are important to you. Discuss how you would plan to achieve each of these goals. What steps would be necessary and how would it impact your life in other areas?

How practical would it be to achieve each of these items?

Please note that just because a goal is difficult does not mean that it is not attainable and should not be pursued before an easier goal. There is a saying that one should reach for the low-hanging fruit first. Those who say this probably have never picked apples professionally. When picking apples, you usually climb a ladder with a bag and pick the apples on the top of the tree (which usually are the highest quality) first, and then as the bag gets heavier, you descend the ladder and eventually pick the low-hanging fruit. Do not shun a goal or dream that is important to you because it is not easy. These may even be the most important ones to pursue first.

Now that you have had a chance to talk over at least your final eight with someone else, choose your top four and rank them. These are the items that I would advise placing your efforts and resources on.  Tell your trusted partner what these goals are and work out a plan to try to achieve them.  Keep accountable with progress reports on these goals, and chances are that you will be more likely to reach them.

Please send any stories or comments you may have regarding this article to .

Goal Setting: An Introduction – Part 3

Prioritization of Goals

Have you put together your lists? Now comes the fun part…

Perhaps you are familiar with the bracket system in sports playoffs. In continuation of this exercise, you are going to take your lists and have a number of playoffs. Take the first two items in your list. Between these two items, if could have only one… which would you choose? The one that you choose gets to remain on your list… the other one you can revisit at a later time. Repeat this process until you are down to no more than two items for those areas that are not important to you and no more than four items for those areas that matter the most to you. Now, there is a strong chance that you will have had trouble deciding between two items… Take a look at what you feel would be ranked number one on your new list… Did anything that it eliminated give you some trouble? If so, now it is time for our “wild card” standing. Take your new wild card contender and rerun it against the top items of your list. If it is more important to you than some of your short list items, feel free to bump these other items with your “wild card”.

Now that you have your top two or four in each respective category, it is time to do some soul searching. Why is this item so important to you? What do you imagine your life would be like if you attained this dream/goal? How would your current relationships change? Correspondingly, how would you feel about yourself if you did not? Could this goal be characterized as “SMART”? If not, how would you change it so that it would be specific, measurable, attainable, relevant, and time-bound? Is there any way you could capture an image to visualize what it would be like to attain this goal?

By this point, you probably have done a fair amount of soul searching and it is time to take a break and distancing yourself from these goals that you have for just a little bit… perhaps it would make sense to sleep before looking at these again.


Goal Setting: An Introduction – Part 2

The List

Many people often have a variety of different interests whether related to work, interests, relationships or religion. Seldom does it make sense for one to drop everything else to pursue one thing. That being said, we all only have 168 hours in our week and a certain degree of talents, skills, and resources we can place towards attaining our dreams and goals. Most people’s goals and dreams fall in the following eight areas:

Career (Your work, job, profession, etc. and related goals)

Community (Any volunteer activities)

Educational/Mental (Any educational activities, formal or self-educational)

Family/Friends (Relations you care about)

Interests (Hobbies, travel, etc.)

Material (Items that you want: cars, jewelry, homes, etc.)

Physical (Any physical goals you may have)

Religious/Spiritual (Beliefs relating to a philosophy or a higher power)

Not everyone has strong interests in all of these areas. It may be that you have interests in only one or two of these areas. It may be that you have interests in all eight over the course of your lifetime, but it is just not practical to deal with these all at once. That is understandable as well. What thought have you given to these areas?

As an exercise, you may want to spend some time thinking about these areas in your life and write down whatever comes to mind. Try to have a list in each of these areas. If it is an area in which you do not have strong feelings, try to come up with at least eight items. If it is an area that is important to you, try to come up with a list of at least sixteen items. Do not worry about whether an item listed is really important at this stage. That will come later. This is an opportunity for brainstorming/exploration. This exercise could easily take a couple of hours of your time. Enjoy it.

Goal Setting: An Introduction – Part 1

Why It Matters

It has been stated that “If you fail to plan, you plan to fail.” As a self-described planner, I am not certain that statement is entirely true. However, it does seem that one could potentially achieve more satisfaction out of life if one had an objective or objectives and a map to get there.

After all, much talk has been given to the Harvard 1979 study or the Yale 1953 study regarding the importance of goal setting. In these studies the 3% that had a concrete written plan for their goals outperformed the other 97% combined by a factor of ten. If such a study were true, it would be extremely compelling. Unfortunately, further research has shown that no such studies existed and that these studies are urban myth. Fortunately, a study was conducted at the Dominican University of California by Dr. Gail Mathews that showed that accountability, commitment, and writing down one’s goals did matter in the amount of success one had in reaching one’s goals.

If you could potentially achieve 20 or 30% more of what you wanted to achieve, for 2-5% of your time, would that seem worthwhile? If the answer is yes, then it may make sense to continue reading beginning in the next paragraph… if not, then I do not want to waste your time. Please read or look at something else. Please enjoy life. Please do something with meaning.

For Those Who Cared… What is a Goal?

According to, the word goal is a noun defined as: “1. the purpose toward which an endeavor is directed; an objective.” Many other dictionaries have a similar definition.

Many have suggested that a goal has five characteristics often remembered by the mnemonic SMART.

  • Specific (It is particular.)
  • Measurable (It can be objectively measured.)
  • Attainable (It is possible to achieve.)
  • Relevant (It matters to you.)
  • Time-Bound (It has a timeline to be achieved.)

In our next part, we will discuss what to do with you goals.

Control & Influence

As some of my readers may have noticed, there are a number of articles on here that at first blush do not seem to relate to finances.  This is one of them, but it very well may be one of the most important articles on the site.

Do I have your attention?


In life there are items that you can control: when you wake up in the morning, how much you spend, etc. These are actions that you can take and though you may not enjoy the consequences or the costs associated with doing them, it is unlikely that someone is holding a gun to your head to prevent you in your efforts.

There are items that you can influence: how much you may pay in taxes or people’s perception of you as someone who is responsible or arrogant, etc. These are items over which you do not fully control but which you may be able to adjust either positively or negatively.

There are many items over which you neither have control or influence. Do not worry about these. It would be a waste of your time to do so.

Now as it relates to finances, you can largely control how much you spend. This has a huge impact on your ability to save.  You cannot necessarily control your income, though you can control your actions which will influence it greatly. If you do not have a job with a salary that you like, you can ask for a raise, look for a new job or an additional job or start your own business. This is not to say that these items are not without risks.

You can influence how much you will pay in taxes both now and later on not only by deciding how much you want to make, but also by where you put your investments. You can also influence how much your investments grow by looking at items such as allocation and fees. You can influence whether or not there will be enough money to take care of loved ones if you pass away.

Most people to whom I talk want to have greater control over their destiny and their finances. I always tell them that control of one’s destiny financially begins with control of oneself and expenses first. Greater control almost always leads to greater influence. Clients that focus on making proper actions that they can control will usually extend their influence. It is through this process that one can seek to have complete freedom and independence.

Please send your comments and questions to .